E-commerce firms see 30% decline in cash on delivery orders post demonetisation

E-commerce companies, including Snapdeal and Shopclues, have seen up to 30 per cent decline in cash on delivery (CoD) orders post the announcement to demonetise Rs.500 and Rs.1,000 denomination notes.

However, they believe that demonetisation and the push for digital payments will boost the sector in the long run, especially since CoD orders being returned is one of their biggest “pain-points.”

As per industry estimates, the cost for CoD returns is about Rs.20 in urban areas and about Rs.75 for non-urban locations.

Snapdeal co-founder Kunal Bahl said CoD orders on its platform had come down to 30 per cent of the overall sales. “After the announcement, COD orders have declined to 30 per cent of our sales from 50 per cent,” he said at an event by Digital India Foundation.

Mr.Bahl said that higher adoption of digital payments would help improve unit economics for e-commerce companies in the long run. “From an economics perspective, it is positive for e-commerce firms, as CoD returns are a big pain point from an economic and logistics perspective. That will also get significantly mitigated going forward as more payments move to digital,” he pointed out.

The surge in digital paymentswill come down once cash comes into the system, but the “equilibrium will settle at higher level than when we entered the demonetisation phase,” he said.

Shopclues co-founder and CEO Sanjay Sethi said in the first four days the company saw a decline of about 15 per cent. “Overall, we saw a decline of about 7 per cent for our orders,” he said. Flipkart co-founder Sachin Bansal, who attended the event via video call, said, “There was a drop in sales when the announcement was made. There were cancellations of CoD orders but it’s recovering now.” Following the demonetisation, some companies like Amazon had temporarily halted CoD facility, while others like Flipkart and Snapdeal had put a cap on the value of orders that could be delivered through the service.

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Source:The Hindu